Olam Group Limited · SGX:VC2
Olam — Olam International — Merger or Acquisition (February 2007)
24 slides from Olam's merger presentation, Feb 7, 2007
Slide 1: Chinatex & Olam: Strategic Partnership in Cotton and Oilseeds Business in China
Chinatex & Olam Strategic Partnership in Cotton and Oilseeds Business in China Investor Presentation 7 February 2007 Singapore 0
Slide 2: Forward looking statements
Forward looking statements This presentation may contain statements regarding the business of Olam International Limited and its subsidiaries (‘Olam’) and Chinatex Corporation and its subsidiaries (‘Chinatex’) that are of a forward looking nature and are therefore based on management’s assumptions a
Slide 3: Team Introduction
Team Introduction Mr. Zhao Boya President & CEO, Chinatex Corporation Mr. Sunny Verghese Group MD & CEO, Olam International Limited Mr. Luan Richeng Vice President, Chinatex Corporation Mr. Andy Tse Director, Olam International Limited Mr. Jagdish Parihar MD, Cotton & Oilseeds, Olam International Li
Slide 4: Presentation Outline
Presentation Outline Partnership Overview About Chinatex Investment Rationale Olam’s M&A Framework Q&A 3
Slide 5: Partnership Overview
¥ Partnership Overview The Brand Behind The Brands
Slide 6: Partnership Overview: JVs in Oilseeds & Domestic cotton
Partnership Overview: 2 JVs in Oilseeds & Domestic cotton Framework Oilseeds JV Acquisition by Olam of a 35% initial stake in Chinatex G&O (CTGO), a fully owned subsidiary of Chinatex Corporation Setting up of a sourcing subsidiary in Brazil Olam shall have the option of acquiring an additiona
Slide 7: Key terms of the Oilseeds joint venture
Key terms of the Oilseeds joint venture Board of Directors : 8 member board (5 from Chinatex & 3 from Olam) Olam to get an additional Board seat upon raising its stake to 45% Management (China): Chinatex to nominate CFO, VP-Manufacturing and VP-Marketing Olam to nominate CEO, Deputy CFO, VP-Projects
Slide 8: About Chinatex
> About Chinatex The Brand Behind The Brands
Slide 9: About Chinatex: Business Profile
About Chinatex: Business Profile A large and successful state-owned enterprise in China, amongst the Top 75 SoEs Chinatex has 2 core businesses operated through two SBUs: Chinatex Commodities SBU (CTC SBU) Chinatex Apparel & Fabrics SBU (CTAF SBU) CTC SBU has four main business divisions: Cotton Sou
Slide 10: About Chinatex: Key Statistics
About Chinatex: Key Statistics Particulars Chinatex Group CTGO Cotton BU Turnover (US$ mil) 2006: 1,866 1,000 500 2005: 1,956 945 390 Net Profit (US$ mil) 2006: 27.8 4.0 13.0 2005: 20.3 6.0 9.4 Employees (#s) 2006: 10,415 365 59 2005: 9,845 205 52 Aggregate Volumes (tons) (Soybean) 2006: -N.A- 2.86
Slide 11: Investment Rationale - Strategic Fit
Investment Rationale - Strategic Fit 10
Slide 12: Oilseeds (Soybean): Market Opportunity
Oilseeds (Soybean): Market Opportunity World China Chinese production under pressure due to decrease in arable land Production (mil tons) 2005/06: 218.04 16.35 China is the world’s largest consumer with a steadily increasing 2004/05: 215.95 17.40 global share – accounts for over 20% Y-o-y Growth (%)
Slide 13: Strategic Fit: Oilseeds JV
Strategic Fit: Oilseeds JV China is the largest consumer and importer of soybean in the world As a part of its strategic plan, Olam had, in 2005, identified G&O as an attractive new product adjacency Olam believes the two key building blocks that are required for success in this business are: Strong
Slide 14: Cotton: Market Opportunity
Cotton: Market Opportunity World China China is the world’s largest consumer of cotton (38% of global Production (mil tons) consumption) 2005/06: 24.85 5.70 Local production and imports 2004/05: 26.21 6.31 contribute to around 60% & 40% of Y-o-y Growth (%): -5.2% -9.7% consumption respectively CAGR
Slide 15: Strategic Fit: Domestic Cotton JV
Strategic Fit: Domestic Cotton JV China is the largest producer, consumer and importer of cotton in the world China’s Cotton industry is currently being deregulated as part of the government’s liberalisation program Chinatex and Olam aim to leverage on this trend and achieve a prime mover advantage
Slide 16: Investment Rationale - Post Investment Plans
Investment Rationale - Post Investment Plans 15
Slide 17: Clear plans to achieve efficiency & value chain integration
Clear plans to achieve efficiency & value chain integration Enhance the contribution of downstream products by setting up & acquiring soybean processing assets in China JV targets to expand crush capacity to 2 million tons in 3-4 years Plans being developed to build an oilseeds processing complex at
Slide 18: Investment Rationale - Financial Impact
Investment Rationale - Financial Impact 17
Slide 19: JVs to be earnings and value accretive from first year
JVs to be earnings and value accretive from first year Oilseeds business Margin enhancing initiatives in Brazil and China likely to be completed over the next 3-4 years Earnings expected to grow at a CAGR of around 20% during this period, from the current, sustainable levels of US$ 5-6 million Posit
Slide 20: Olam's M&A Framework
¥ Olam’s M&A Framework The Brand Behind The Brands
Slide 21: Recap of Olam's Inorganic growth strategy / M&A framework
Recap of Olam’s Inorganic growth strategy / M&A framework M&A Objectives Accelerated entry into identified new product adjacency Accelerated access into a new geography Reduce timing to impact for a new value chain expansion initiative Overcome industry barriers Maintain Industry attractiv
Slide 22: JV with Chinatex is in line with this M&A Strategy
JV with Chinatex is in line with this M&A Strategy M&A Objectives Accelerated entry into identified new product adjacency (Oilseeds in China & Brazil) Accelerated access into a new geography (domestic cotton in China) Reduce timing to impact for a new value chain expansion initiative (Oilseed
Slide 23: Olam: The Brand Behind The Brands
¥olam 22 The Brand Behind The Brands
Slide 24: Thank You
The Brand Behind The Brands
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